We all know Warren Buffett is a money magnet and he knows how to make and attract money. But along with making money he also knows how to save and manage money. We are sure you want to know his secrets, and that is why today we are going to explain five tips that can tell you how to save and manage money like Warren Buffett.
1. Say No to Toys
According to Warren Buffett, most of the toys are nothing but neck in the pain, and you should always avoid such toys. The most sacksful money manager in the world prefers not to waste his money on the sports car, expensive clothing’s in the wardrobe, or on expensive gadgets that could be completely useless for him. Instead of wasting this money, he prefers to invest that money on things or opportunities that increase his wealth.
If you want to manage money like Warren Buffett, then you should say no to all luxury items that can decrease your wealth. These luxurious things could be anything ranging from a big luxurious apartment, yacht or a car to an expensive phone, that you don’t need, but you bought it because you can buy it.
2. Always Look For Discount
Another famous quote from Warren Buffett’s wisdom goes like this “Price is something that you pay and value is something that you get.” Most of us may find it hard to believe, but he doesn’t mind using coupons or discount options in his everyday shopping. He believes on the simple terminology that “every penny saved is every penny earned.” And if you think he is the only one who has frugal mindset then you are wrong about it. Hilary Swank has more than $40 million net worth yet she use discount coupons at grocery stores.
If millionaires and billionaires could ask for discount or bargains, why you should feel ashamed about it! To manage and save money like Warren Buffett, it is advised that you look for deals if needed, wait for a good price and then only buy anything.
3. Slow Down While Taking Your Decision
In many cases, it is easier to ignore or forget the pros and cons of a financial decision, and we regret our decision later. Because of this habit, we end up having a lot of troubles as well related to money and finances. Warren Buffett believes his habit of slow decision making is one of the most important reasons for his gigantic success. He many time said it himself that he not only got great success because he made right decisions, but he also avoided terrible mistakes.
Thus, slowing down in the financial decision is a great thing, and you should make a simple rule that you never decide anything about money with the flow of emotions. You should always wait for at least 3 minutes before taking any decision about money, you should check your emotions, and if you feel a rush of adrenaline in your blood because of any reason, you should never take action on money matter at that time.
4. Say Yes to Saving And No to Debt
Mr. Buffett was in Dan Patrick Show, and someone asked about the biggest financial mistake that we all make. In answer to this question he explained, people do not learn the importance of proper saving at the early stage, nor they make it a habit. However, people try to get rich in short time, and they always fail. Also, he explained that people try to get rich, while they live their life on borrowed money such as loans, credit card, etc. He is very clear about this rule that one should never borrow any money and one should spend only after saving money.
So, if you desire to become rich like Mr. Buffett is, then you should follow the save first and spend letter philosophy. You should understand that every dollar counts and you should start saving without any delay.
5. Buy Necessary Things With Modesty
This is not a hidden fact that Warrant Buffett lives in the same house that he purchased in 1958. If he wants he can buy not one but several mentions around the world in their wealthiest neighborhood, yet he never gets temptation for that. He knows the money saved on these purchases can help him invest wisely in other business that will give him more return and value to the world. He considers it as the third best investment of his life because he was able to save money for other important things. We all can learn this habit from him to avoid a debt ridden life.
If you already have a home that fulfills your need and you paid of the mortgage, then you should avoid buying a bigger home to have the extra luxury. With that extra luxury, you will get the liability of a new mortgage, more property taxes, increased maintenance charges and many more expenses. This rule applies to the purchasing of anything and everything. Be it a car, home, gadgets, dresses, or anything make sure you buy it with modesty to increase your net worth and save money for important thing such as retirement planning or living a happy life.
Along with these five tips, it is also important that you keep learning every day to have more knowledge about finance, saving, investment and assets increment. Warren Buffett read hundreds of pages every day to increase his knowledge. If you want to learn more from Warren Buffett, then you should read Gems from Warren Buffett that cover all the letters that Mr. Buffett wrote to his shareholders in 34 years and you can find the book here.
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We hope it was helpful for you, let us know your opinion in the comments and also share the rules that you already follow and rules that you are going to follow from now onward to save and manage money like Warren Buffett.